New Jersey has the nation’s fifth-highest yearly car insurance rates, according to the latest report from MarketWatch Guides.
High repair costs and more car accidents are driving the rates, insurance advocates said. But consumer advocates argue that insurance companies have raised rates to cash in on high profits.
According to the April 2024 report, minimum liability coverage in New Jersey costs $1,032 or $86 a month. Only Michigan, Connecticut, New York and Florida had higher rates than the Garden State.
MarketWatch Guides calculates rates by analyzing the number of uninsured drivers, the average minimum-liability car insurance costs and the laws governing uninsured drivers in each state.
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Rates in New Jersey have historically been high because it’s a more densely populated state which means more people are getting into more accidents, according to Robert Passmore, a vice president at the American Property Casualty Insurance Association, which represents insurance companies.
Passmore said the rates are so high because car crashes have shot up since the pandemic.
“The hits are harder because there’s been a deterioration in driving habits. More people are getting tickets for extreme speeding. There’s more distracted driving on the road,” Passmore said.
And 20 years ago, fixing a car in an accident was cheaper than it is today, Passmore added.
Take a windshield. Twenty years ago, all that was needed was “a piece of glass, a rubber gasket and some adhesive, and they could do it in your driveway,” Passmore said. Now, with sensors and cameras, it’s much harder to fix a car’s windshield.
Still, consumer advocates and residents, say auto insurers are over prioritizing profits.
Micheal DeLong, a researcher and advocacy associate with the Consumer Federation of America, said that while new technologies are a factor in why rates have increased, “insurance company greed” is another factor.
“We understand that insurance companies have to make profits, but they also need to accurately match rates to how risky someone is to insure, and also, profits aren’t supposed to be outrageous,” DeLong said.
The New Jersey Department of Banking and Insurance said auto insurance providers have been asking for rate hikes more frequently and at a higher rate in the past several years.
More than 20 companies have been granted double-digit rate hikes since January 2023.
Generally, the requests for increases are “attributed in part to inflationary trends, reinsurance costs, supply chain issues, increases in new/used car prices, increased car repair costs, increased incidences of excessive speeding and distracted driving that result in more severe accidents and fatalities,” said Dawn Thomas, a spokeswoman for the New Jersey Department of Banking and Insurance.
She said rate change requests must meet specific standards.
“If the Department finds that a rate request by a carrier is unreasonable, inadequate, or unfairly discriminatory, the Department will not approve the request,” she said.
The increases have frustrated many residents.
Amanda Gill, of Totowa, recently switched insurance companies after her auto insurer raised her rates.
The 37-year-old said she and her husband paid the $4,200 annual rate this April to insure their Jeep Cherokee and Nissan. But in May, they received a letter from AAA, their new insurer, saying it asked the state to increase auto insurance rates across the board so her rate might change.
“If it were to go up, it would feel like torture,” Gill said.
“But there’s nothing we can do about it,” she added. “I think that these insurance companies are just taking advantage. There cannot be that much overhead for them to charge individuals this much money.”
Staff writer Karin Price Mueller contributed to this report.
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Amira Sweilem may be reached at asweilem@njadvancemedia.com.
